Raising investment is one of the most exciting - and daunting - milestones for many tech startups. But before you start polishing your pitch deck or booking meetings with investors, it’s worth asking: are you truly ready, not just for negotiating the investment process but also building a mutually beneficial, long-term relationship with investors?
This article explores what investor-readiness really means, why it matters, and how founders can assess their preparedness. We’ll provide a practical checklist, highlight common pitfalls, and offer guidance to help you approach fundraising with confidence and clarity.
What does it mean to be investor-ready?
Investor-readiness goes far beyond having a great idea or a slick pitch. It’s about demonstrating that your business is viable, scalable, aligned with what investors are looking for and can stand up to scrutiny. It means having the right foundations in place, from your team and product to your financials and governance.
Research shows us that preparation is key to success, while entrepreneurs who’ve raised investment will tell you that fundraising requires resilience and lots of work. Being investor-ready can help you to:
Maximise your chances of securing investment
Speed up the fundraising process
Build credibility with investors
Help you avoid costly mistakes or delays
An investor-readiness checklist
Please note that this is not an application form, nor an exhaustive list. Following these steps won’t guarantee funding, but they will help you to prepare and maximise your chances of success.
It’s also worth remembering that investor-readiness isn’t a one-size-fits-all process. Different investors have different priorities, and being “ready” is as much about mindset and clarity as it is about having the right documents in place.
1. Preparing your mind
Talk to your significant other or business partner
Fundraising is intense. It can take six months or more and will impact your personal life. Make sure you have support at home and are mentally prepared for the journey.
Be ready to part with equity and some control
Investors expect a stake in your business and a say in major business decisions. It’s important to understand what this means in practice, including dilution and consent rights. Remember, though, that you’re not “giving away” equity. You’re selling it in exchange for money and often much more. Many investors bring valuable expertise, strategic guidance, and industry connections that can accelerate your growth. It’s a fair exchange of value, with both sides committed to the future of your business.
Consider finding a co-founder
While not strictly required, having a co-founder can strengthen your fundraising position. Investors often look for complementary teams with shared responsibility and diverse skill sets. A co-founder can also help run the business while you focus on raising funds, and offer emotional support during what can be a demanding process. If you’re going solo, be prepared to demonstrate how you’ll manage the workload and fill any skill gaps.
Know what you want from an investor
Not all investors are the same, and knowing what you want is crucial. How much capital from how many individual investors? Do you want them on your board? How operationally involved do you want them to be? Are you looking for sector-specific investors with industry contacts? There’s a big investor base out there, so focus your efforts on the ones that can offer what you need.
2. Logistics and operational hygiene
Plan your exit from your current role
You don’t necessarily need to quit your job before raising investment, but you should be prepared to commit full-time once funding is secured. Investors want to see that you’re fully invested in the success of the business. While some founders begin fundraising while still employed elsewhere, most investors will expect you to transition into the startup full-time as a condition of the deal. This is often formalised in a service agreement.
Remember that CVs are important to investors and often form a key piece of management due diligence. Make sure yours is up to date and reflects a professional transition, showing that you’ve handled your exit responsibly.
Register your business and set up a registered office
Establishing a formal company structure signals credibility to investors and partners. This includes registering your business with Companies House and appointing yourself (and any co-founders) as directors. You’ll also need to provide a registered office address - ideally not your home, as this information becomes publicly accessible. Using a serviced office or virtual address is a simple and cost-effective way to maintain privacy and present a professional image.
While it’s fine to keep overheads low and work from home in the early stages, once you secure investment, your investors may want to visit your premises. At that point, it’s worth considering a desk in a co-working space or incubator hub, which also offers networking opportunities and a more collaborative environment.
Appoint a solicitor and accountant
Legal and financial advisors are essential for navigating the fundraising process and avoiding costly mistakes.
Form a board and appoint a Chairperson
A strong board adds strategic value and reassures investors. A Chairperson can act as a buffer between founders and investors, helping to manage relationships.
Figure out what insurances you need
At a minimum, you’ll need Employer’s Liability and Key Person insurance. The level of cover for Key Person insurance is typically around twice your annual salary, but requirements can vary, so it’s best to confirm with your investors.
It’s also advisable to consider additional policies such as Professional Indemnity, Public and Product Liability, and Legal Protection insurance, depending on the nature of your business. For sector-specific risks, tailored cover may be necessary - for example, Premises and Inventory insurance for manufacturing businesses.
You don’t need to pay for the policies until the last minute, but it’s wise to gather quotes in advance so you can move quickly when the time comes.
Clean up your bank accounts
In the early stages, it’s not uncommon for personal and business finances to become blurred. However, investors will typically request at least six months’ worth of business bank statements during due diligence. Make sure these records are clean, professional, and free from anything that could raise concerns.
If you're currently using a challenger bank designed for startups, consider whether it will meet your future needs. Some providers impose limits, like capping annual revenue at £1 million. If your pitch deck projects £2 million by year three, it’s worth reviewing your banking arrangements now to avoid complications later. Starting with the right financial infrastructure helps build investor confidence and supports smoother growth.
3. Commercial readiness
Get paying customers or traction
Even a few early adopters can validate your idea and improve your valuation.
Get into sales mode
You’ll need to sell your vision to co-founders, customers, and investors, so it’s a good idea to start practising as soon as you can.
4. Technical and legal readiness
Make your business plan bulletproof
Be honest, thorough, and realistic. As part of the legal process of investment, you’ll be expected to provide warranties confirming that all information you have supplied is true and accurate to the best of your knowledge.
Build a robust financial model
Your model should clearly show how you’ll use the investment, how long it will last, what success looks like, and the key levers that drive growth and profitability. Investors will use your model to assess not just the opportunity, but also your grasp of the numbers. If you’re planning to raise a follow-on round (as many startups do), they’ll also use it as a benchmark to evaluate your performance against your original plan.
Produce a good set of management accounts
Up-to-date accounts are essential. Investors need to understand your financial position before committing.
Put your product through the mill
Get feedback from as many real users as possible. Be ready for technical due diligence and tough questions.
Get your cap table in order
Investors will expect you to provide them with your existing capitalisation table. They’ll want to see a clear, up-to-date version that includes all previous investments, even informal ones from friends or family. You should be able to model how future investment rounds or option pools will affect ownership and dilution.
Transfer the intellectual property into the company
Any intellectual property (IP) must be owned by the company, not individuals or universities. So, if you’re a university spinout then you’ll likely need to strike a deal with the university to get the IP rights assigned to your business. Similarly, any patents, designs, copyrights, or trademarks registered in your personal name should be formally transferred to the company. Investors will typically require full ownership of the IP to sit with the company before releasing any funds, so it’s a good idea to start this process early.
5. Market and competitive landscape
Understand your market size and growth potential
Investors want to see a big enough opportunity to justify their investment.
Know your competitors
Be honest and transparent about how your offering compares to others in the market. Clearly articulate what sets you apart and explain why those differences position you to succeed.
Have a go-to-market strategy
Show how you’ll acquire and retain customers and what channels you’ll use.
6. Investor fit and fundraising strategy
Research potential investors
Angels, venture capitalists, corporate investors, and accelerators all have different expectations, so it’s important to tailor your approach.
Prepare your pitch materials
A compelling pitch deck is a must-have tool when you’re raising investment. Having a data room - a secure online repository containing key business documents - ready can also speed up the fundraising process.
Be ready for due diligence
Have your legal, financial, and operational documents organised and accessible.
Understand investor expectations
Most investors are looking for a return, usually via an exit. Be clear about your long-term vision.
Common pitfalls
Before you start the fundraising process, it helps to know what to expect. These are some common pitfalls that can catch founders off guard:
Underestimating the time it takes
Fundraising often takes longer than expected, typically 6 to 12 months. Planning ahead can help you stay focused and avoid unnecessary pressure.
Overvaluing the idea, undervaluing execution
Investors rarely back ideas alone. They look for strong teams, clear traction, and the ability to execute.
Weak financial understanding
Be ready to explain your margins, burn rate, and runway. A solid grasp of your numbers builds credibility and confidence.
One-size-fits-all pitching
Each investor has different priorities. Tailoring your pitch shows you’ve done your homework and understand their perspective.
Poor preparation for due diligence
Missing documents or disorganised records can slow things down or raise red flags. Having your legal, financial, and operational materials ready shows professionalism and builds trust.
Final thoughts
Investor-readiness isn’t just about ticking boxes. It’s about building a business that’s fundable, scalable, and compelling. Whether you’re raising your first round or preparing for Series A, taking the time to assess your readiness can save you time and missed opportunities.
Use this guide as a starting point, but don’t go it alone. Seek feedback, talk to other founders, and consider working with advisers or accelerators who can help you refine your approach. With the right mindset and support, you’ll be better equipped to navigate the journey and make a stronger case for investment.
